Earnings Call: Q4 2023

Mar 28, 2024

Summary

Q4 adjusted EBITDA rose 86.2% YoY to BRL 172 million, while adjusted net income increased 71.5% to BRL 117.5 million. FY growth reflected insurance and credit expansion, with 2024 plans centered on synergies, cost savings, and lower financing costs.

Good morning, ladies and gentlemen. Welcome to the video conference of Wiz Co regarding the results of the fourth quarter of 2023. If you want to follow the simultaneous interpretation, click on the interpretation globe on the bottom bar of the screen. After clicking this button, choose the language of your preference, English or Portuguese. If you are listening to the video conference in English, you can mute the original audio by clicking on the button mute original audio. After the presentation of the results, we will start the Q&A session. You can send your question via the Q&A icon on the platform, which will be then answered by the Wiz Co representatives present in the meeting. If your question is not answered during this video conference, the investor relations team will contact you later to answer your questions. Before proceeding, we would like to clarify that any statements that may be major in this video conference regarding the company's business prospects, projections, and operating and financial targets are based on the beliefs and assumptions of the company's management, as well as on the information currently available to the company. Forward-looking statements are not guarantees of performance. They involve risks and uncertainties because they relate to future events and therefore depend on circumstances that may or may not occur. Investors and analysts should understand that general economic conditions, industry conditions, and other operating factors may affect the company's future results and could lead to results that differ materially from those expressed in such forward-looking statements. For the Wiz Co team today, we have here Mr. Marcus Vinícius de Oliveira, CEO, Lucas Neves, CFO and investor relations director, and Stephania Fernandes, superintendent of investor relations at M&A and Operations. Now I would like to turn over to Marcus Vinícius for his presentation. Please proceed, sir. Good morning, everyone. Welcome to our earnings results meeting of the fourth quarter of 2023. Before turning over to Lucas, I would like to share with you a brief message. In the year when we celebrate our 50th anniversary, and it is so rare to see such a longstanding company in insurance broking business, we have achieved solid results aligned to our goals, reaffirming our commitment to excellence and innovation. We celebrate the completion of 2023, not just because it was a landmark for the history of our company, but because we are proud of our accomplishments. 2023 was characterized by volatility and uncertainties influenced by elements related to geopolitical issues and also structural references. The Selic rate was high, and also credit issues in the Brazilian market have become additional challenges, especially for our units in bancassurance and credit and consortium. Added to that, we have faced the challenges of maturation and consolidation of our recent business units. However, we were able to adapt to market conditions showing resilience and flexibility, which are crucial to overcome challenges and make the best of new opportunities. Our proactive attitude to face diversity also led to a deep restructuring of our internal structure, leading to significant savings and costs and expenses with a 20% reduction in headcount, maintaining productivity levels and efficiency. We redesigned strategies to strengthen our cash and develop technologies. We launched new products and worked together to pursue consistent results. Paying attention to the opportunities that we have in our market and reinforcing our potential of working as a group, we reinforce an important pillar of our culture, synergy, increasing new business in our units. We understand that the organizational culture, the way of being that we have at Wiz, should be connected to the business strategy, and Wisers are concerned with how Wiz is perceived outside. We know that together we will always be stronger. We highlight the accomplishments on Wiz Corporate, and also Inter Seguros with new records in efficiency and with great image or reputation gains. Inter Seguros has reached the landmark of 1.7 million customers, 41% growth vis-à-vis the last year, showing its capacity to combine a strong growth and recurrence. Paraná Seguros unit, in its first year of interaction, has issued more than BRL 30 million in premiums, reaching high levels of commercial efficiency. In credit and consortium, we would like to highlight the results of Promotiva that conducted over BRL 6.8 billion in credit and consortiums, reaching BRL 90 million in net revenue. In its first year of operations, that unit has expanded its footprint with expansion of its sales team by about 62%, with a consistent growth throughout the year, setting new records in sales. We have also delivered different initiatives along the year to strengthen the generation of cash of the parent company. I would like to highlight operational efficiency projects and adjustments in the cash flow of the liabilities of the companies and payout reduction. Those actions have led to a more comfortable cash projection to conduct our business in the short-term. We have moved forward in technology with Wiz Pro platform launch that has led to more engagement and connectivity among our operations and business partners. In addition to that, we are also certified by the ISO 27001 Insurance Data Security and reducing vulnerability risks to the company. We have reached significant advantages in ESG, especially in our integrity program. We would like to highlight that we have achieved the Pró-Ética Certificate, which is an initiative of the Controladoria-Geral da União of Brazil, the UN Global Compact, and Instituto Ethos, which intends to encourage integrity measures by companies. This accomplishment reflects the commitment we have in doing business ethically and in building a market business that is transparent and ethic. In 2024, we are confident about the potential of our business, optimist about the macroeconomic scenario, and expecting acceleration of our business results. Supported by our competitive advantages like technology, we will keep capturing synergy in innovation and in the development of new businesses. We will also focus on maturation and consolidation of our operations. Finally, we would like to reinforce that we are deeply grateful to our board members, shareholders, and especially our Wisers, and as well as also business partners, because our Wisers have also collaborated to build one of the largest companies in insurance in Brazil. We will keep building together the next 50 years of our history. Thank you very much, and I will turn over to our CFO and Investor Relations Director, Lucas Neves, who is going to talk about our results. Thank you, Marcos, and good morning, everyone. I am going to start presenting the financial data on slide 3, but I am going to talk about operational and strategic highlights in the period. Before starting the presentation of the excellent results of the quarter and of the end of the year, I would like to briefly talk about the restatement of the financial information related to the quarter. This restatement was necessary because we needed to make improvements and adjustments, and the company identified that with the support of independent auditors. Basically related to the combination of business that affected investments, accounts payable, and the intangibles balance, as well as tax impact. We also made the restatement and also restated data and also in the lender insurance product. That did not lead to any impact on the structure of the company. The net income was BRL 4.5 million negative or minus 3% on what was previously presented. BRL 390,000 was the impact on the cash, 0.1% lower than expected. We also made adjustments between the lines without making changes to the final balance. That information and other information related to the impact of the restatement of the financial statements are in the explanatory notes of December 31, 2023. The analysis related to that statement related to the restatement data. Along the lines of the initiatives that we presented in the last quarter to strengthen cash and the structure of the company, we established loan agreement with our shareholders of the controlling company totaling BRL 115 million. They were established with a remuneration rate of 100% of the CDI plus 1.0% a year pro rata due upon the agreement expiration in 2028. This operation is aligned with the capitalization strategy of the company due to the obligations that we have agreed. Another important point relates to our advances in ESG. In the fourth quarter of 2023, we obtained the Pró-Ética Company Certificate, an initiative from CGU, the Controladoria-Geral da União of Brazil, and Instituto Ethos that seeks to encourage the adoption of integrity measures by companies, regardless of the industry or size of companies. Those companies go through a complex Assessment process, showing how they commit to the best practices in fighting corruption and fraud. This reinforces our commitment to deliver results aligned with the ethical way of doing business. Now moving to slide 4, I would like to show the financial highlights of the fourth quarter of 2023. In that quarter, we had BRL 268.8 million in net revenue, a 48.8% increase vis-a-vis the same quarter last year. Excluding the Caixa, we had current net revenue that was 46% higher than the fourth quarter of 2022, totaling BRL 208 million. That was leveraged by a strong increase in the insurance business, with a 43% increase in insurance revenue, and also leveraged by the credit and consortium's revenue that had a 209% increase vis-a-vis the fourth quarter of 2022, especially due to the Promotiva business. Later on, I'm going to delve into those figures. Also, we had a record adjusted consolidated EBITDA, BRL 172 million in the period, 86.2% increase vis-a-vis the fourth quarter of 2022. The adjusted consolidated net income totaled BRL 117.5 million, which is 71.5% higher than the fourth quarter of 2022. Now moving to slide 5, I would like to show you some highlights. As Marcos mentioned, we have reached very strong results in 2023 due to the strategic focus on the maturation of two operations on capturing synergies and also on operational efficiency. In the year, we totaled BRL 2.8 billion in insurance premiums, a 26.7% increase year-over-year, reinforcing our relevance in the insurance market in Brazil. Along 2023, we had expansion of our units with renewal of our product portfolio to improve the value proposition to its customers through a more complete and personalized portfolio with more profitability. BRB Seguros, for example, launched 14 new products and reinforced its presence in the digital market. Also, 1.7 million Seguros, one of the biggest players in bancassurance in the company. Paraná Seguros in its first year has issued more than BRL 30 million in premium. In credit and consortiums, we have reached a volume of BRL 13.2 billion in credit and consortium sales, which is 107% higher year-over-year. Promotiva, which was incorporated at the end of last year, added BRL 8.6 billion in this period. So we totaled BRL 914 million in net revenue ex commissions, 22% higher year-over-year, despite the challenges in the macroeconomic scenario. Now moving to slide seven, we have a summary of the consolidated results. In the first quarter of 2023, our EBITDA with BRL 182.7 million, which is 126% higher than the same period of last year, the highest ever value. Over BRL 500 million in EBITDA, a 34.7% expansion year-over-year, given the record commercial performance in several business units of the company and a focus on operating efficiency implemented over the year. Now moving to consolidated net income, we had a 405% increase in the quarter because of the good operating results we had and also non-recurring effects that I'll go into detail later. The net margin or the control stake net income totaled BRL 58 million in the fourth quarter, 492% higher vis-a-vis the first quarter of 2022, BRL 48 million increase. Now moving to slide eight, we see the effects related to our adjusted results. In the fourth quarter, we had BRL 13.4 million for the run-off Rede Caixa unit related to the lender insurance, and it was reversed in the first quarter of 2023. They were adjusted for best comparison with the results of 2022. In the first quarter of 2023, we also adjusted BRL 1.4 million related to tax credits of INSS taken by the company in this period. Annually speaking, in addition to those items, we also adjusted BRL 42.7 million related to the reversal of tax provisions. With the adjusted of these effects, the EBITDA, it had an 86.2% increase vis-a-vis the first quarter of 2022 and 44% difference vis-a-vis year-over-year. BRL 579 million. In net income, we also adjusted non-recurring effects without cash impact. A highlight are to the depreciation and amortization and impairment effects totaling BRL 51.8 million in the quarter because of the adjustment of the amortization of intangibles related to acquisitions and adjustment related to a write-off due to impairment related to Polishop Seguros subsidiary. In the financial results, we also adjusted them to present value of the future installments of cost of investments and the adjustment at the earn-out fair value and option to purchase the investments. Also, some variations of financial instruments were taken into account. So the results we had were 71% superior to the first quarter of 2022. In the year, the adjusted net income totaled BRL 378 million, 33% higher than 2022. Now moving to slide nine, we analyze the results of the parent company. They relate to the run-off of the Rede Caixa business and the Crispo Paredes business incorporated by the parent company in the second quarter of the last year. So we have different expenses here. In the first quarter of 2023, the parent company had BRL 63.2 million in EBITDA, which accounted for a BRL 47 million or 297% increase vis-a-vis the first quarter of 2022. The good operating results in the quarter relate to the record sales results in different business of the company. In the first quarter of 2023, we had BRL 29.5 million in equity method, MEP, which was 170% higher than the results in the first quarter of 2022. This was because of the improved performance in the participation of results of the controlled companies and also a reduction in equity of identified issues that used to be recognized in depreciation and that it was reclassified to the equity method line. Also, a BRL 283 million increase in net commissions because of the new company and provision of cancellation of revenue in the run-off Rede Caixa unit in the first quarter of 2022 because of the restatement of the 2022 results. There was a partial reversion in the first quarter of 2023, which impacted the comparative analysis. In the year, if you adjust for the non-recurring effects, the company would reach BRL 293 million in adjusted EBITDA, 26.4% higher than 2022. In net income, the company had BRL 58 million in the fourth quarter, the best results accounting for a BRL 48.3 million increase vis-a-vis the first quarter of 2022. This was leveraged by the EBITDA performance and by the reduction in financial results. Year-over-year in accumulated results, BRL 141.6 million, 8.4% higher than the same period following the evolution of EBITDA. Adjusting these recurring effects, we had BRL 232 million, 26.8% higher than the same period of last year. Now moving to slide 11, we see the consolidated results by segment. You can also see this information in the attachment that we also released. In the year, 66% came from our current operations. The business units consolidated by Wiz in the insurance market accounted for 52% of our current results. In comparison to the same periods of other years, we see diversified results aligned to the continuous increase in revenue. This performance was only possible because we focus on strategic results and strategic deliveries. Now moving to slide 12, you see the operating results of different segments. Let's start with the insurance segment. In the quarter, we reached BRL 148.2 million in net revenue, a 43% increase vis-a-vis the same period of last year. This was related to a record commercial performance of some units, like BRB Seguros, that had a 37.9% growth vis-a-vis the first quarter of 2022, representing the best historic operation of that unit. Also, Wiz Corporate grew 68.8% or BRL 28 million vis-a-vis the fourth quarter of 2022, leveraged by signing new businesses and also because they have renewed and recurrent products in their portfolio. Inter Seguros also reached BRL 47.2 million in gross revenue, 36.1% higher than the first quarter of 2022, BRL 5.9 million in equivalence for that in the same period. Paraná Seguros, in its first year of operation, reached BRL 8.5 million in gross revenue in the first quarter of 2023, BRL 0.9 million addition to this. In EBITDA, the segment totaled BRL 109 million, which is 73% higher than the fourth quarter of 2022 because of the higher commercial and operational efficiency, because of the control of cost and expenses. That has led to a 12.6 percentage point increase in EBITDA margin. Now moving to slide 13. Let us show in the credit and consortium's distribution, Promotiva and Wiz Parceiros. In the quarter, we reached BRL 35 million in ex commission net revenue, which was a robust growth of 209% vis-à-vis the same period of last year, with an EBITDA of BRL 121 million, 533% higher than the first quarter of 2022. This reflects the good results of Promotiva's first year of operation. With that, we have seven accounts for 70% of the consolidated revenue for the year. In the first quarter of 2023, we had BRL 1.7 billion in credit, 4.4% higher than the first quarter of 2022. A consistent growth even in adverse credit scenario. The operation keeps focusing on expanding its commercial network and accredited agreements, and in the quarter with over 645 cobans in production, a 62% increase vis-à-vis the fourth quarter of 2022, which strengthens its presence in the market and reduces the dependence on specific agreements. Now moving to slide 14. We show the services segment Wiz Concept and the run-off Rede Caixa operation. In the first quarter of 2023, the services segment had a retraction of 13.7% in net revenue ex commissions vis-à-vis the fourth quarter of 2022, impacted by the retraction on the revenue from solutions and corporate insurance, and also the telesales and the corporate insurance solutions. The year of 2023 is characterized by focus on business profitability, discontinuing lines with low results, and investing in improvements in customer relations, and also excellence in service. As a reflection of these efforts, the EBITDA of BRL 4.8 million had a 50.2% increase vis-à-vis the first quarter of 2022, and an EBITDA margin of 7.8 percentage points. Related to run-off Rede Caixa, here are the results of the stock of revenues related to sales conducted until February 14th of 2021. It added BRL 60.7 in net revenue. That was 59.4% higher than the first quarter of 2022. Due to the restatement of the financial statements, we canceled the lender insurance product and as a result of the restatement of the financial statements, this partially was reversed by the realization of reversals of this provision in the first quarter. That has an impact on the comparative analysis. Excluding these effects, we would have a retraction of 1.7% in net revenue, 4.5% retraction in EBITDA comparing the two quarters. Now moving to slide 15, I would like to highlight the main points related to corporate results and below the EBITDA. In the first quarter of 2023, SG&A line totals BRL 13 million, BRL 9.5 million below the first quarter of 2022 as an effect of the revisions conducted on Wiz to optimize its structure, which is in line with the company's strategy in pursuing higher operating efficiency and alignment of the corporate strategy. Related to the lines below EBITDA, there was a 2% increase due to amortization and impairment, 10.2% increase. This is due especially because of the acknowledgment of BRL 16.2 million in write-offs due to impairment in assets in the consolidated results. In the first quarter, we also acknowledged BRL 10.8 million in additional amortization as an effect of the adjustment of the amortization of intangible non-recurring assets because of the acquisition of BRB Seguros and Bmg Corretora. That will lead to an additional amortization, which is recurrent of about BRL 2 million per quarter in the next quarters. In the first quarter of 2022, there was an additional DA recognition because of the restatement of the results. We had BRL 8.6 million in financial results, which was a 37.4% reduction vis-à-vis the first quarter of 2022 because of the reversal related to adjustment for inflation because of Finance AG current with Wiz Parceiros. That totaled BRL 9 million. As the results of this recognition of new results, we had BRL 4.1 million that was recognized, so from BRL 18.8 million and now BRL 13.7 million. So that line would have had a 5.3 reduction as an effect, basically due to AVP, vis-à-vis the third quarter of 2023. We had non-recurring reversals of the accounts payable related to adjustment for inflation. I would also like to highlight the IRPJ and CSLL. There was an increase vis-à-vis the fourth quarter because of the incorporation of new business. A change of the tax regime of the BRB Seguros and with Wiz Corporate now have actual profit system. These values were partially compensated by the tax credits from the payment of interest on shareholders' equity. We also had an effective tax rate of 21%, impacted by the acknowledgment of interest on shareholders' equity. So we would have 35.5% tax rate in line with the previous quarters. In the fourth quarter of 2022, because of the restatement of the results, we had BRL 14.7 million recognized, which reduced IR and CSLL values that were recorded for that quarter. Also because there was a change in understanding of the long-term incentives paid to executives and how that could be deductible. So in the first quarter of 2022, we registered BRL 4.7 million as a positive result. On slide 16, we show the composition of our cash flow. In working capital, BRL 23.6 million relate to the reduction in the balance of accounts payable and increase of the balance of tax to be compensated. BRL 1.5 million in investments due to the disbursement of BRL 7.8 million for the share with BPOs that were purchased. It also considered the reverse of a positive effect in results because of the updated values of the accounts payable in acquisitions totaling BRL 6.3 million. These values were partially compensated by the effects in cash because of the AVP adjustment to present value, and also adjustment for inflation of BRL 12.3 million related to the acquisitions of the company. In financing, BRL 0.2 million relates to the payment of BRL 7.9 million in interest and amortization of the principal amount lent, and also Polishop Seguros and Promotiva. This was partially compensated by the debentures recognized in the company of totally BRL 8.1 million. Finally, in dividends, BRL 68.5 million was disbursed. Part of that was the second part of the dividends and interest on shareholders' equity related to the net profit, as approved in the general assembly of April 2023, and BRL 28 million in dividends to shareholders of companies that are not part of our controlling companies. BRL 296.6 million and BRL 103.6 million were the total amount of cash in the controlling company. Now final results, final slide 17. Here are the perspectives for the company for 2024. As Marcos mentioned, we are optimistic about the perspectives for this year. Indication of a potential reduction in interest rates will positively impact our business because it reduces the average cost of our debt and establishes a positive scenario to increase credit in the business where we operate. We will also annualize cost savings that were captured along 2023, which tends to leverage the company's EBITDA. As a strategic priority, we will keep working on business synergies and in bringing more profitable operations and pursuit of new business. We will work to strengthen the capital structure to allow the company to keep growing. We will endeavor efforts in our technology to strengthen our competitive edge. This concludes this earnings presentation, and we will now open the Q&A session. Now I will turn over to Stephania Fernandes, who will start the Q&A session. To participate, please send your question using the Q&A icon of this platform. The questions will be answered by Wiz Co representatives in this meeting. Estefania, please proceed. Good morning. Let us start with our Q&A session. Let me start with William Aranjado from Itaú BBA. He says, "Good morning. Thank you for your presentation. Congratulations on your results." There are two questions. The first regards the insurance segment. How do you see the main operations for 2024? BRB, BMG, and Inter, should we expect an acceleration in the issues of premiums and overall for 2024, what operations do you see have the greatest potential? Thank you for your question, William. In 2023, the beginning of the year had a 13.75% Selic rate that really involved all the credit of banks that operate in bancassurance business, and logically, that caused a lot of difficulties for us. Once that time was over, and with a reduction in the Selic rate, we were able also to capture synergies. We did our homework, and that improved our expectations for 2024. So for 2024, we see potentials of growth. BRB, for example, launched a Crédito Protegido Sênior product aimed at 71 to 80-year-olds. It was very innovative product in this market, and it was customized by Cardif Insurance Company. This was very welcome in the market and is going to be matured in 2024. In the fourth quarter, we launched the BRB Resolve product that aimed at higher penetration expansion of product in BRB. For 2024, we expect the channels to hire BRB products like BRB Vida or Super Premiada or BRB Odonto. We expect these products to increase. In 2023, we had 14 new products. In 2024, we aim to consolidate those products as part of the BRB network. Our perspectives are very positive. In 2023, in terms of issued premiums, we had BRL 62 million, and for 2024, we believe we will achieve higher values than 2023. The credit portfolio is well-sized, and with a reduction in the Selic rate, we will see a direct connection to our sales force in the bank. Now, talking about BMG, and similarly, this credit portfolio of that bank, Inc. is very favorable, and a reduction in tax rate is very favorable too. In BMG in 2023, there was an expansion in portfolio, which will be increased in 2024. Then we will have customers that will be more profitable and more loyal. Three new products were launched. The key one was Bmg Med, that has about 30,000 items sold, very interesting levels. That continues to be a product with very good acceptance in BMG channels. They also launched the consortium product and corporate insurance products that have been selling very well in the bank. In addition to that, in 2024, we expect some product adjustments aligned with BMG goals. They are gaining traction so that we can grow the volume of premiums issued by BMG itself. Now, talking about Inter. In Inter Bank, as mentioned before, in 2023, we reached a customer base of about 1.7 million customers. They can associate strong growth and profitability. In addition to the significant growth in their customer base, Inter also had a 41% improved result. They also had a life insurance by increasing the credit of the credit card. In 2024, they will focus on the experience of customers and also modernization of how you can hire the products. I believe that premiums will increase as well in 2024. We have very positive expectations for 2024. We expect those units to keep growing, and they will be among the top five business that we have at Wiz Co. In addition to that, we have very strong growth from Promotiva. This is our operations that manages cobans at Banco do Brasil. We were able to grow in the distribution network by 62%, over 650 cobans. We have very positive expectations for 2024. I can tell you that the first quarter of 2023 is going to be very interesting. That's basically what we had to say, and I hope that we're able to answer your question. Lucas, would you like to say anything? Yes, I would like to add something. Marcos talked about the performance of each business. We're very optimistic for 2024, and we believe that when you can combine the top-line growth of our subsidiaries, especially those in bancassurance, with the annualization of cost reductions we've had in most of the cost cuts happened in the first and second quarter, so the cost structure has been linear for the past 12 months. Now with the growth in revenue and with a reduction of financial expenses due to the payment of our obligations or because of the reduction of the Selic rate, we believe that 2024 will be really a watershed year for us. Now, moving to the second question of William Aranjado, it asks about the financial expenses. Could you explain the reasons why there was this improvement quarter-over-quarter? Were those recurring changes? What is the level of this line? What kind of expectation should we have for the next quarters? Let me answer that. This was an atypical quarter for financial results. At the end of the year, we assessed the accounts payable, and if you take the average of financial expenses of the first, second, and third quarters, on average, we had BRL 28 million in financial expenses. We believe that along 2024, we will have a reduction in comparison to these BRL 28 million, a 10% drop for the quarter. Now, moving to Busch Spiegel from BTG Pactual. This question is complementary to the previous one. In the quarter, we saw a major increase in revenue for BRB Seguros. Considering the origination of credit, should we expect a recurring level for the next quarters? Marcos talked about that. I would just like to add that the good performance of BRB is a mixed result of the initiatives related to new products and also increase of the lender insurance product age. Historically, the first quarter is always the strongest quarter. We believe that from now on, and you see that in different business units of Wiz Co related to credit. We see that the performance for 2024 will probably reach the levels of the second half of the year of 2023, not specifically the level of first quarter. Another question from Busch Spiegel. After the adjustments of costs deducted last year, reduction of payout and the debt with controlling companies, any other measure you expect to implement in 2024 to improve the capital structure, such as the sales of non-strategic assets? Well, the first thing that we've been doing quite significantly, and the fourth quarter shows that, we want to increase the generation of operational cash, operating cash of Wiz. So that improves the capital structure. The second point, which is also recurring, it's a recurring agenda for us, is that we always assess ways of refinancing the liabilities of Wiz in a way that you can match the payment of these obligations with the generation of operating cash. We keep assessing this topic in the debt market. Talking about the sales of assets, we do not expect to do this at this point. Right now, we are simplifying our narrative, doing less things, but doing things well done. But that's not something we expect to implement in the short term. I would just like to add something. In our cash flow, you see that the cash flow is stable for 2024. There will be no need to do it. But if we find an opportunity to do it, that's something to be analyzed in the future, but we don't have anything on the table right now. Next question. The return in increase in administrative costs was a one-off thing, or the level of administrative expenses is expected to be higher than in the last quarters? Along the year, we have made several cuts in cost. We believe that this level of administrative cost for the first quarter is going to be a recurring level, and that's what we expect to see in the next quarters. This should be our baseline when we analyze the next quarters in terms of Wiz cost and expenses. If you want to send a question, just write it down on the Q&A icon. We are going to answer questions in the order we receive them. Now, let's move to Guilherme Grespan's question from JPMorgan. Congratulations on your results. We have two questions. First, looking at 2024, do you believe that you can expand the EBITDA margin vis-à-vis the 64% level of the first quarter of 2023? Given that runoff of Caixa will be a wind that will be against you, what about the disciplining cost? Could that be a wind in favor? Well, as to margin in the controlling company, we see that the equity in terms of investment should grow faster than the reduction of runoff, and I need to maintain the discipline of cost. If I can balance that, we can expand margin. When you look at the results of the first quarter and the growth we had in the equity method, we are very optimistic for 2024 because it's only natural that we'll be able to bring margin gains, but now focused on gains in productivity of our subsidiaries more than in administrative cost control. Most of our homework was already done in 2023. His second question is, could you give us more details about the AVP movement in the quarter? We had a reversal of AVP at BRB, BMG, and Promotiva. Would that be like a counterpart in the drops of accounts payable of these joint ventures? Well, we had a lot of one-off effects because it has to do with the business combination process we went through. We hope that the AVP adjustment to present value adjustments are similar to what we had in the first quarters of 2023. Next question about Polishop. The loss at this level was in a non-recurring extraordinary effect. Any expectation that Polishop can generate positive results in the short term? Thank you for your question. It's important to say something first about Polishop. It's being impacted like any retail company in Brazil. It's not a specific case. It's just part of something that is going on in the industry. Another point I would like to highlight is that the total revenue of Polishop Seguros is less than 1% of the net revenue of Wiz Co. So a reduction would not change a lot the results of the group as a whole. We keep confident that they will uptake their results, but we believe that the return is going to be worse than we expected when we had this transaction. In this quarter, we had a partial acknowledgment of the impairment of this acquisition. So now we complete with this video conference, and I would like to thank you all for participating. Have a good day.